Getting the Best Financing on Your Home
Although finding the best property that suits your needs is our main goal, but our other objective is to assist you in taking advantage of a lower interest rate and better home-loan terms for us as well. Over many years of dealing with numerous lenders and financial institutions within the State of Florida, we have narrowed our list of the lenders down to the few top notch financial institutions. This will allow us to assist you to get in touch with the ones that are the most useful match for both you and your financial picture.
Interest Only VS Interest Principal Loan
Interest Only Loans
In Interest Only Loan Programs the borrower will only pay the interest portion of the loans on a monthly payment schedule. This program is not for everyone and all borrowers should be cautious when applying for interest only and know that their monthly payment will eventually increase substantially. The loan term for interest only programs are generally set as 5 to 7 years limits. Although the Interest Only Loans could be a great financial vehicle in some circumstances, but it although has some pitfalls that the borrowers should familiarize themselves to calculate if this is a right program for them. The following is an example of the Interest Only Loans being beneficial for the buyers:
- Short Term Hold-
- The borrower is certain they will resell the property in less than the 5 to 7 years when the payment of the principal becomes necessary. For this reason, the Interest Only Loans have been very popular with investors who are not planning to occupy the property and their main goal is to gain profit by flipping the home for a higher price
- Lower Initial Payments-
- For Borrowers who know their financial standing will improve in near future and wish to have lower monthly payments in early stage of the loan
- Qualifying for a Bigger and More Expensive Home-
- Since the initial monthly payments for the Interest Only Loans are much lower, the mortgage payments have less negative effects on their Expense/Income Ratio, which means the borrower could qualify for a larger mortgage loan.
- Use of Funds for Investments with Better Yield-
- The borrower is certain that the money allocated to the monthly payments for the principal could be used in other investments with much higher yield than the interest rate charged by the lender.
The standard mortgage loan for working individuals
Just because a homebuyer’s earnings history is not an indicator of a great wealth, or just because he or she are an hourly employee, that should not prevent anyone from owning their dream home. Each financial company and many loan providers often underwrite loans based on their unique prerequisite requirements. At times, this may not function as the most friendly terms and conditions for any salaried or per hour salary earner. We are familiar with lenders who are most likely to deal with you properly based on your financial standings and provide you with the most beneficial terms, and w will direct you to the right lender based on your situation.
The self–employed Homebuyers –
Since the real estate turmoil of 2007, obtaining a loan for an entrepreneur or self–employed individuals have turned into a more stringent process. Income and expenses ratio is a lot more specific, and the borrowers’ vetting process has become more detailed. For that reason, we have tried to stay up–to–date on new requirements. We could lead you to a number of solutions for excellent home loans programs that are tailored to the self–employed individuals and families.
Less than an Excellent Credit Rating –
In the new financial era, many mortgage companies are becoming more stringent when it comes to the credit-worthiness of homebuyers. On the other hand, the financial crisis has also had an adverse effect on Americans income and credit and having a lower credit score, unfortunately, has become more common than before the mortgage crisis. All and all, while many individuals pay their expenses on time, but still do not possess stellar credit ratings. We will try to assist you to find the loan companies within the Port Saint Lucie, St Lucie West, St Lucie, Stuart, Hutchinson Is, Hutchinson Island, Jensen Beach, and Fort Pierce real estate marketplaces who are willing to supply excellent home mortgages intended for lower FICO scores.
Adjustable Rate Mortgages, ARMs, and When They’re Acceptable –
Although most residential real estate buyers are purchasing a house that they plan to occupy for several years, the national average is seven years. Investors, on the other hand, are looking for a shorter ownership period. Adjustable Rate Mortgages, ARM, are generally suitable when the strategy is to possess a property for fewer than five to seven years, particularly five years. The lower interest rate of ARM mortgages is another incentive for borrowers to use these type of loans. ARMS could lead to a considerably less monthly mortgage payment, which makes it perfect for borrowers who will not hold on to the property for a long period of time. This could also allow a purchaser to be eligible for a larger mortgage which increases their buying power. Nevertheless, ARM is not commonly a good practice for families buying homes to live in. The main reason remains in the fact that as soon as the ARMs reaches the time for payments of the principal, the loan costs can increase more than the estimated amount by the homeowner. Also, any increase in the interest rate would have a significant effect on the amount of the monthly payments.
Financial Disclosure and Deal-To-Closing Factors –
Following the mortgage and real estate crisis, the examining of the borrowers’ personal earnings and expenditure details by financial institutions and their underwriters are considerably tighter than before. Be ready to start searching for records, and proof of payments. We shall also emphasize on the transparency and honesty with lenders will become helpful when declaring financial facts that might have an affect on your ability to cover the loan payment. Even when it is not requested by the lenders during the early stages, be ready for inquiries for additional paperwork later on. Also, it is really a smart idea to not increase any charge card limits, obtain a new card or add to any other debt between the time of applying for a loan and the closing on the property. Also, be advised that many lenders will perform an additional credit assessment prior to the closing to make sure no debt is added to change the Expense/Income Ratio.
Look at the Charges and Ask Questions –
There is a variety of charges related to obtaining a home loan ranging from appraisal fee to escrow of interest, tax, and insurance. The origination fees along with other charges often amount to the largest expenses in the closing package. Don’t be reluctant to check out all charges, why they are incurred and exactly how they are calculated. It is your hard earned money, and as the client, it is your right to ask questions.
There is a variety of charges related to obtaining a home loan ranging from appraisal fee to escrow of interest, tax, and insurance. The origination fees along with other charges often amount to the largest expenses in the closing package. Don’t be reluctant to check out all charges, why they are incurred and exactly how they are calculated. It is your hard earned money, and as the client, it is your right to ask questions.
Compare Mortgage rate
Most home buyers don’t realize how much extra an additional point, or even 1/2 or 1/4 pf point, will cost them on repayment of their mortgage during the life of the loan. It is imperative to shop around to find the lowest mortgage rate, while avoiding extra fluff fees, by comparing quotes from a number of lending institutions. The best place to start with is the bank or credit union that you work with.
Compare Mortgage Terms
Mortgage terms usually include the total number of mortgage payments, how many years, and interest rate. The longer the term of the mortgage the more costly the mortgage will be. The following example of $300,000 Mortgage with 3.79% Interest rate is a brief breakdown and comparison of these terms.
| Description |
10 Years |
15 Years |
20 Years |
25 Years |
30 Years |
| Monthly Mortgage Payments |
$3,008 |
$2,882 |
$1,783 |
$1,549 |
$1,396 |
| Total Principal Paid |
$300,000 |
$300,000 |
$300,000 |
$300,000 |
$300,000 |
| Total Interest Paid |
$60,900 |
$93,773 |
$128,380 |
$164,680 |
$202,619 |
| Total Mortgage Payment |
$360,900 |
$393,773 |
$428,380 |
$464,680 |
$500,619 |
Refinancing A Mortgage
When it comes to refinancing of your mortgage there are many factors to consider to determin if the refinance is cost effective to save money on the repayment of your mortgage:
- Is the new interest rate lower at least by a point compared to your existing rate?
- What is the overall cost of refinancing?
- Consider the number of years you have to repay the new mortgage and compare it with the number of years you have been paying your current mortgage and how many years left if you stay with the same mortgage.
- Please note that your monthly payments in the early years are mostly allocated for payment of interest and only a minimal amount goes toward the principal. By the middle of the mortgage term, you reach a halfway point, paying 50% toward principal. Consider if the refinance it worth going back to paying little toward principal again.
